A machining company makes gears. Each gear costs $5 in materials to make. The machining company can make 1000 gears. A clock maker needs 10 gears to make a clock and sells a clock for $150. The clock maker can make 100 clocks. Gears can be bought or sold on the open market for $10 A. Find the outside option profit for each firm Now imagine that the machining company can make special gear which improve the clock's time keeping. Doing this requires a retrofit to the factory costing $1,000. The retrofit does not impact the marginal cost of making gears. Clocks made with the special gears can be sold for $200. Ex Ante A. What is the maximum total profit generated by both firms working together? B. Find the Nash bargaining profit for each firm. Ex Post Now assume that the machining company has done the retrofit. They cannot sell special gears on the open market and going back to producing normal gears would require another $1,000 retrofit. The clockmaker wants to bargain again. D. Find the new outside option for each firm. E. Find the new Nash bargaining profit for each firm